News from New York Liquidation Bureau

For more information contact: Erin Carney - 212-341-6524; Cell Phone:347-582-8359; email: ecarney@nylb.org

Court of Appeals Determines Liquidation Bureau is Not a State Agency

NEW YORK , NY (10/11/2007; 1429)(readMedia)-- Insurance Superintendent Eric Dinallo issued the following statement in response to the unanimous decision in Dinallo v. DiNapoli (formerly captioned Serio v. Hevesi), handed down today by the Court of Appeals, determining that the New York Liquidation Bureau is not a state agency and is therefore not subject to audit by the New York State Comptroller.

“We are extremely gratified by today’s unanimous ruling by the Court of Appeals. The Court confirmed that the Insurance Superintendent, when acting as receiver for insolvent insurance companies, and the New York Liquidation Bureau, which runs those companies on a day-to-day basis, act in a private, not governmental, capacity. The decision found that the Superintendent when acting as Liquidator is not a state officer and is not administering state monies. As the Court recognized, the Bureau’s private and independent status benefits creditors of the insolvent insurance companies and protects New York State’s government and taxpayers.

“We have great respect of the State Comptroller’s Office and the essential role it plays in oversight of state agencies. But declaring the Liquidation Bureau a state agency would have been counter to the law and would have created enormous legal problems and potentially saddled state government with financial obligations of the failed insurance companies that the Liquidation Bureau operates. It could also interfere with efforts to expeditiously privatize failed companies.

"Although this case was about far more than transparency and outside oversight, transparency and accountability are nonetheless critical elements in successfully fulfilling the Bureau’s legal responsibilities. Since his appointment in April 2007, Mark G. Peters, Special Deputy Superintendent in Charge of the New York Liquidation Bureau, has already made substantial progress in reforming the Bureau. Those reforms include installing new management, hiring independent certified public accountants to conduct a “top to bottom” audit of the Bureau, reconstituting the hiring of outside attorneys so that the process is based solely on merit, speeding up the payouts to creditors of insolvent and impaired insurance companies, and moving forward in other insolvencies, one of which has languished for more than 20 years.

“To institutionalize the reforms underway at the Bureau, we will propose legislative amendments to the Insurance Law which require annual audited financial statements for the insolvent insurance companies administered by the Bureau. We look forward to working with the Legislature to enact these legislative amendments.”

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